Royal Mail sells two Nine Elms plots as it eyes further property sales to bolster its balance sheet

Oliver Gill
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The Nine Elms depot has previously been the scene of industrial action by Royal Mail staff (Source: Getty)

Royal Mail has bagged £101m from selling two of the seven plots it owns at Nine Elms.

The postal giant sold the sites to US property fund Greystar. They comprise less than a third of the total acreage Royal Mail plans to flog to developers.

Greystar will build high-end private rental apartments on the sites.

The sale delivers a hefty profit to Royal Mail given the plots were valued in its books at just £12.9m. It has earmarked £30m of the proceeds to re-invest in the five other sites it owns at Nine Elms to boost "future sales values".

Read more: Royal Mail faces headwinds despite beating expectations

And Martin Gafsen, Royal Mail's group director of property and facilities solutions, said Greystar's development plans "will benefit the other plots on the Royal Mail site".

The Nine Elms site is one of three former mail centres in London Royal Mail is selling, or has sold, to swell its cash coffers.

Mount Pleasant in Farringdon was put for sale earlier this year. The site has planning permission to build 600 new homes. Meanwhile, a one-acre plot in Paddington was sold in 2014 for £111m.

Although rental values have declined in the Nine Elms area of late, Royal Mail is hoping that selling the other five plots will help its finances.

Read more: Here's why rents near Nine Elms are falling

Net debt at the 501-year-old firm jumped from £224m to £338m over its latest financial year to March. It is facing testing times ahead as the firm's largest of its three divisions, UK letters, is a shrinking market.

In addition, it is staring down the barrel of industrial action from its 160,000-strong workforce.

The firm has one of the largest final salary pension schemes in the UK, which it plans to shut in March 2018 despite being in surplus.

Royal Mail said the cost of keeping the scheme open has rocketed. The government handed over responsibility for the pension scheme in 2012. But Royal Mail revealed earlier this year the cost of keeping it open is likely to top an unaffordable £1.3bn each year.

It is understood unions are negotiating with Royal Mail over the closure but they have not counted out walk-outs if an agreement cannot be met.

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